June 2012 – Page 3 – artdiamondblog.com

Happiness Research Undermines European-Style Labor-Market Regulation

Bryan Caplan persuasively pans the book he is revieiwng. But along the way Caplan makes an intriguing observation of his own:

(p. A11) . . . , happiness research makes a powerful case against European-style labor-market regulation. For most economists, the effect on worker well-being is unclear. On the one hand, regulation boosts wages; on the other, it increases the probability that you will have no wages at all. From the standpoint of a happiness researcher, however, this is a no-brainer. A small increase in wages has but a small and ephemeral effect on happiness. A small increase in unemployment, by contrast, has a massive and–unlike most other factors–durable effect on happiness. Supposedly “humane” regulations to boost workers’ incomes have a dire cost in terms of human happiness.

For the full review, see:
BRYAN CAPLAN. “BOOKSHELF; Lessons From Cloud Nine; Happiness predicts higher job performance and even future health. But what predicts happiness?” The Wall Street Journal (Tues., August 16, 2011): A11.
(Note: ellipsis added.)

Rats, Motivated by Cheese, and Stimulated by Electricity and Chemicals, Grow Neurons and Walk Again

“After several weeks of neurorehabilitation, previously paralyzed rats initiated a walking gait and soon began sprinting, climbing stairs and avoiding obstacles.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A13) Rats with a spinal cord injury that left their hind legs completely paralyzed learned to walk again on their own after an intensive training course that included electrical stimulation of the brain and the spine, scientists reported on Thursday.
. . .
The report, published online on Thursday in the journal Science, provides a striking demonstration of what until recently few scientists thought possible: complete rehabilitation after a disabling blow to the spinal cord. After weeks of training, many of the rats could walk as well as before the injury, and some could run.
. . .
The rats then began a daily regimen. Outfitted with tiny vests, held upright on their back legs but left to bear their full weight, the rats tried to move toward a piece of cheese that beckoned nearby. They lurched forward like furry paratroopers, unsteady on their feet after a hard landing.
The scientists provided stimulation in three places: electrically, in the motor area of the brain and in the spinal cord below the injury, and chemically, infusing the wound area with drugs thought to promote growth.
And growth is what they got. After two to three weeks of 30-minute daily sessions, the rats began to take their first voluntary steps. After six weeks, all of the rats could walk on their own, and some could run and climb stairs.
. . .
In effect, . . . , the training forces the brain to recruit what is left of the neural system to get the job done. Neurons sprout like seedlings on a Chia Pet when they are seeking new connections, and the scientists found increases of 300 percent and more in projections in the brain stem and around the injury — evidence that the nervous system was remapping its connections.

For the full story, see:
BENEDICT CAREY. “In Rat Experiment, New Hope for Spine Injuries.” The New York Times (Fri., June 1, 2012): A13.
(Note: online version of the story is dated May 31, 2012.)

Michael Milken Provided “Access to Capital for Growing Companies”

(p. 163) Although [high yield] . . . bonds eventually became known as a favored tool for leveraged–buyout specialists in the 1980s, Mike’s original goal was different. He wanted to provide access to capital for growing companies that needed financing to expand and create jobs. Most of these companies lacked the investment grade” bond ratings required before the big financial institutions would back them. Mike knew that non-investment-grade (a k a “junk”) companies create virtually all new jobs, and he believed that helping these companies grow strengthened the American economy and created good jobs for American workers.
It was by studying credit history at Berkeley in the 1960s that Mike developed his first great insight. He found that while there could be significant risk in any one high-yield bond, a carefully constructed portfolio of these assets produced a consistently better return over the long run than supposedly “safe” investment-grade debt. This was proved during the two decades of the 1970s and ’80s when returns on high-yield bonds topped all other asset classes. Mike saw a great opportunity when he realized that the perception of default risk far exceeded the reality. In fact, these bonds had a surprisingly low-risk profile when adjusted for the potential returns.
After twenty years of superior gains, the high-yield bond market finally fell in 1990. Actually, it didn’t fall–it was pushed by unwise government regulation that forced institutions to sell their bonds. The dip only lasted a year, however, with the market roaring back 46 percent in 1991.
Mike’s competitors–Goldman Sachs, Morgan Stanley, and Credit Suisse First Boston, the old oligopolies of the syndication (p. 164) business–labeled them “junk bonds” to disparage Mike’s brainchild. He was not a member of their white-shoe club and they were not going to take his act lying down.

Source:
Wyly, Sam. 1,000 Dollars and an Idea: Entrepreneur to Billionaire. New York: Newmarket Press, 2008.
(Note: bracketed words and ellipsis added.)

Open Offices Create “the Urgent Desire to Throttle One’s Neighbor”

John Tierney “at his cubicle with a wall of books.” Source of caption quote and photo: online version of John Tierney’s NYT article quoted and cited below.

(p. 18) The original rationale for the open-plan office, aside from saving space and money, was to foster communication among workers, the better to coax them to collaborate and innovate. But it turned out that too much communication sometimes had the opposite effect: a loss of privacy, plus the urgent desire to throttle one’s neighbor.

“Many studies show that people have shorter and more superficial conversations in open offices because they’re self-conscious about being overheard,” said Anne-Laure Fayard, a professor of management at the Polytechnic Institute of New York University who has studied open offices. . . .
Take Mr. Udeshi’s office, at the N.Y.U.-Poly business incubator, a SoHo loft with dozens of start-up companies housed in low cubicles. The entrepreneurs there say they sometimes get useful ideas from overheard conversations but also find themselves retreating to a bathroom or a broom closet for private chats. When they have to discuss a delicate matter with someone sitting next to them, they often use e-mail or instant messaging.
“You talk to more people in an open office, but I think you have fewer meaningful conversations,” said Jonathan McClelland, an energy consultant working in the loft. “You end up getting interrupted a lot by people’s random thoughts.”
. . .
Researchers at Finland’s Institute of Occupational Health have studied precisely how far those conversations carry and analyzed their effect on the unwilling listener: a decline of 5 percent to 10 percent on the performance of cognitive tasks requiring efficient use of short-term memory, like reading, writing and other forms of creative work.
“Noise is the most serious problem in the open-plan office, and speech is the most disturbing type of sound because it is directly understood in the brain’s working memory,” said Valtteri Hongisto, an acoustician at the institute. He found that workers were more satisfied and performed better at cognitive tasks when speech sounds were masked by a background noise of a gently burbling brook

.
For the full story, see:
JOHN TIERNEY. “From Cubicles, Cry for Quiet Pierces Office Buzz.” The New York Times, First Section (Sun., May 20, 2012): 1 & 18.
(Note: the online version of the article is dated May 19, 2012, and has the title “From Cubicles, Cry for Quiet Pierces Office Buzz.”)

In Wisconsin a Choice Between the Party of the Takers and the Party of the Payers

(p. A3) Craig Dedo, a computer consultant and Walker supporter, said the race boiled down to one question: Who runs Wisconsin? “The Democrats and the unions, who are the takers?” he asked, “or the Republicans, the party of the private sector and the people who pay the bills?”

For the full story, see:
MONICA DAVEY. “Recall Election Could Foretell November Vote.” The New York Times (Fri., June 1, 2012): A1 & A3.
(Note: the online version of the article is dated May 31, 2012.)

Entrepreneurs Should Seek Problems, Not Opportunities

“Jim McKelvey drew on experiences as a businessman and glassblower in his speech at Big Omaha 2012.” Source of caption and photo: online version of Macy Koch, “Jim McKelvey: “Just go ahead and build it”.” Silicon Prairie News. (Thursday May 10, 2012).

(p. 2D) The dynamics of the glass-blowing industry changed when a new, smaller version of the traditional glass-blowing furnace was developed. The economics of glass-blowing suddenly changed.

But as McKelvey’s glass-blowing skills grew and as he developed more products, including a patented glass water faucet, another barrier emerged: access to the financial system.
At one point, McKelvey was about to sell one of his faucets. The customer wanted to pay with an American Express credit card, but McKelvey couldn’t accept it without the requisite hardware. The sale fell through.
McKelvey then had a problem he needed to solve: Why wasn’t there a way to accept payments on a smartphone?
So he teamed up with Jack Dorsey, a co-founder of Twitter who worked with McKelvey at Mira, to start Square, which allows users to accept payments through their phones.
It was an idea that tackled a problem, McKelvey said, suggesting to attendees: “Go out there and seek problems. Don’t look for opportunities.”

For the full story, see:
Ross Boettcher. “Traveling the Road to Innovation; A former ‘Quitter’ and Others Offer tips at the Big Omaha Conference.” Omaha World-Herald (Fri., May 11, 2012): 1D & 2D.
(Note: the online version of the article has the title “Many roads to innovation at Big Omaha.”)

“”Go out there and seek problems. Don’t look for opportunities.” Jim McKelvey, co-founder of Square.” Source of caption and photo: online version of the Omaha World-Herald article quoted and cited above.

In Antitrust, as in Medicine, First Do No Harm

(p. 94) Western Union’s lawyers carne up with a dusty old New York Stale law, dated 1905, that said no one could buy more than 10 percent of a telegraph company chartered in that state without the approval of Albany lawmakers. Hard to believe, but it was right there in black and white and there was no possibility of getting the New York State legislature to understand why it was vital to build digital highways.
Talk about unintended consequences!
(p. 95) Originally, the law was written to stop Western Union from monopolizing the telegram business, but the law backfired and was used by the monopolist for its own protection.

Source:
Wyly, Sam. 1,000 Dollars and an Idea: Entrepreneur to Billionaire. New York: Newmarket Press, 2008.

Lucasfilm Will Build Somewhere “That Sees Us as a Creative Asset, Not as an Evil Empire”

“Lucas Valley in Marin County, Calif., where residents’ objections led George Lucas to abandon a bid to expand operations at a new site near Skywalker Ranch.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A13) SAN RAFAEL, Calif. — In 1978, a year after “Star Wars” was released, George Lucas began building his movie production company far from Hollywood, in the quiet hills and valley of Marin County here just north of San Francisco. Starting with Skywalker Ranch, the various pieces of Lucasfilm came together over the decades behind the large trees on his 6,100-acre property, invisible from the single two-lane road that snakes through the area.

And even as his fame grew, Mr. Lucas earned his neighbors’ respect through his discretion. Marin, one of America’s richest counties, liked it that way.
But after spending years and millions of dollars, Mr. Lucas abruptly canceled plans recently for the third, and most likely last, major expansion, citing community opposition. An emotional statement posted online said Lucasfilm would build instead in a place “that sees us as a creative asset, not as an evil empire.”
If the announcement took Marin by surprise, it was nothing compared with what came next. Mr. Lucas said he would sell the land to a developer to bring “low income housing” here.
. . .
Whatever Mr. Lucas’s intentions, his announcement has unsettled a county whose famously liberal politics often sits uncomfortably with the issue of low-cost housing and where battles have been fought over such construction before. His proposal has pitted neighbor against neighbor, who, after failed peacemaking efforts over local artisanal cheese and wine, traded accusations in the local newspaper.
The staunchest opponents of Lucasfilm’s expansion are now being accused of driving away the filmmaker and opening the door to a low-income housing development. That has created an atmosphere that one opponent, who asked not to be identified, saying she feared for her safety, described as “sheer terror” and likened to “Syria.”
Carl Fricke, a board member of the Lucas Valley Estates Homeowners Association, which represents houses nearest to the Lucas property, said: “We got letters saying, ‘You guys are going to get what you deserve. You’re going to bring drug dealers, all this crime and lowlife in here.’ “

For the full story, see:
NORIMITSU ONISHI. “A Pyrrhic Victory for Foes of a New Lucasfilm Project; In Lieu of digital Studio, Plan for Low-Income Homes.” The New York Times (Tues., May 22, 2012): A13 & A19.
(Note: ellipsis added.)
(Note: the online version of the story is dated May 21, 2012 and has the title “Lucas and Rich Neighbors Agree to Disagree: Part II.”)

“Mr. Lucas said Marin needs affordable housing. A resident called his plan “class warfare.”” Source of caption and photo: online version of the NYT article quoted and cited above.